New Package Travel Regulations (PTR) - Part 2

Following on from my blog last week there is some further detail that is covered in the New PTR Directive that needs to be understood. The first is what is the new Linked Travel Arrangement ("LTA") ? "What is excluded from the Directive ? What about the surrounding insolvency provisions ?

Linked Travel Arrangements

LTA means a combination of at least two different types of travel services for the purpose of the same trip or holiday, not constituting a package, resulting in the conclusion of separate contracts with the individual travel service providers. This is if one of the providers involved or a retailer facilitates the combination :

a) where the traveller selects and agrees to pay for each travel service separately on the basis of separate bookings on the occasion of a single visit or contact with the point of sale ; or

b) through the procurement of additional travel services from another trader in a targeted manner through linked online booking processes where at least the traveller's name or contact details are transferred to the other trader and such additional services are procured at the latest 24 hours after at the latest, when the booking of the first service is confirmed.

Exclusions from Directive

We need to reiterate what a travel service is by definition in the PTR Directive to be able to correctly ascertain what the Directive does not apply to.

A Travel Service is one of four types :

a) Carriage of passengers,

b) Accommodation other than for residential purposes,

c) Car rental or other modes of transport,

d) Any other tourist service not ancillary to the above

The Directive does not apply to the following :

Packages and LTA sales less than 24 hours duration or excluding any overnight stay.

Business travel if there is a framework contract in place.

Where only one of the elements 1a-c is combined with 1d and where 1d does not form a significant proportion. A significant proportion is when the tourist service accounts for more than 25% of the total price and is marketed as such or perhaps is the real reason for the trip. If it represents an essential feature of the trip or holiday it can also be deemed as significant.

Single contracts.

Ferry/train etc which includes accommodation if it is primarily transportation and not combined with 1b-d.

Infrequent organisers not-for-profit, which is likely to be schools, charities or sports clubs.

Ancillary contracts covering travel services in addition to the package (e.g. transfers) and booked without the involvement of the travel organiser or ancillary contracts covering financial services (travel insurance).

Insolvency

Traders are required to state clearly and prominently whether they are offering a Package or LTA, and also provide information on the corresponding level of protection, before the traveller agrees to pay. This is important because this Directive applies to all EU state traders, which we know have different levels of protection for consumers. Member States should ensure that travellers purchasing a Package or LTA are fully protected against insolvency of the organiser, of having facilitated the LTA or a business involved in the LTA. The required insolvency protection should take into account the actual financial risk of a business involved in the LTA, including the type of combination of travel services they sell, foreseeable seasonal fluctuations as well as the extent of pre-payments and the way in which these are secured. In accordance with Directive 2006/123/EC of the European Parliament and of the Council25, in cases where insolvency protection may be provided in the form of a guarantee or an insurance policy, such security may not be limited to attestations issued by financial operators established in an particular Member State. In order to facilitate the free movement of services, Member States should be obliged to recognise insolvency protection under the law of the Member State of establishment. To facilitate cooperation and supervision of businesses which are active in different Member States, with regard to insolvency protection, Member States should be obliged to designate central contact points.

In the early stages of the new PTR formation in the EU the UK Government was not in favour of consumer protection and insolvency protection in the place of establishment. The UK representatives in EU made representations as such, but they were outnumbered by the voices of the other EU Member States. The UK were in favour of protection based on where the consumer was situated. Therefore in the uncertain horizon of BREXIT and the necessity to revisit all these areas of EU law it is conceivable that this area will also be revisited at a later date.

If you are an Reporting Accountant for tour operators you need to understand how their business operates, how they differentiate the different types of travel arrangements and how they report to the regulators as such. You need to be able to ascertain how this new PTR affects the businesses you act for.